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Econ 2106 Extra Credit #2 > 7.1-1 ; 7.2-1 ; 7.2-2 ; 7,2-3 ; 7,2-4 (Profit/Costs/Production) -K.Cappo > Flashcards

7.1-1 ; 7.2-1 ; 7.2-2 ; 7,2-3 ; 7,2-4 (Profit/Costs/Production) -K.Cappo Flashcards

1
Q

The difference between the revenue a firm earns and the sum of the opportunity costs of all the resources employed at that firm defines __.

A

Economic Profit

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2
Q

As long as revenue is __ than the sum of opportunity costs, business owners can afford to pay all of the employees a salary that is better than their next best opportunity.

A

Greater

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3
Q

If total revenue is less than the sum of opportunity costs of resources….

A

Resources will seek employment elsewhere

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4
Q

The difference between a firm’s total revenue and the explicit expenses that it must pay out defines __.

A

Accounting Profit Calculated

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5
Q

Accounting costs are only __ costs that the firm has to write checks to pay.

A

Explicit

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6
Q

The opportunity costs of the Employees, Managers, and Shareholders (are/aren’t) accounted for in accounting costs.

A

Aren’t

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7
Q

What is the opportunity cost(s) of the managers, employees, and shareholders?

A

The most money that they could earn elsewhere.

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8
Q

Economic rent is…

A

The amount of payment an economic resource receives in excess of of its next best alternative.

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9
Q

Economic profit is a notion that determines…

A

Whether or not a firm is doing well enough to stick around.

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10
Q

What is the difference between economic reasoning and accounting reckonings is __.

A

Sunk Costs

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11
Q

A Sunk Cost is defined as…

A

An unrecoverable cost incurred in a previous time period that has no relevance for any current decisions.

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12
Q

If benefits are __ the required additional costs to finish a project, then finish it.

A

Greater than

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13
Q

If benefits are less than the required additional costs to finish a project, then __ the project.

A

Terminate

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14
Q

Do not let __ costs make you do unprofitable things.

A

Sunk

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15
Q

T or F: Monetary payment must be made before cost is incurred.

A

False

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16
Q

Businesses ask the question “How much should I produce?” to ensure that….

A

They will make the most profit

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17
Q

A firm’s given inputs allows it to make certain __.

A

Outputs

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18
Q

What three things do we need to know about a firm to determine its profit?

A

Technology, Costs, Prices

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19
Q

How much output a firm can produce with a given amount of input is mainly determined by __.

A

Technology

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20
Q

The amount of output a firm can produce with a given amount of input defines __.

A

Total Output

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21
Q

The Short Run is…

A

A brief period of time during which you can change only one (or a few) of your inputs.

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22
Q

While some inputs are fixed, others are __.

A

Variable

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23
Q

The total amount of output that a given amount of labor can produce, holding constant technology and holding constant the quantity of all other inputs that the firm used is…

A

Total output of variable input labor

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24
Q

The total output schedule shows….

A

The total amount of output you can produce with given amounts of variable input labor, holding constant technological know how and the amount of all other inputs used.

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25
Q

T or F: In the short run, all inputs are variable.

A

False

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26
Q

A productions possibility chart shows

A

Total output

27
Q

T or F: Given the firm’s technology and the firm’s cost to produce output, economists are able to predict a firm’s profit.

A

False

28
Q

Factor space, number of conveyor belts, tools, and raw materials are all __.

A

Fixed

29
Q

Total Output is

A

The amount of output a firm can produce with a given amount of labor (holding constant technology and other inputs).

30
Q

The total product schedule can be represented on a graph by a __.

A

Total Product Curve

31
Q

The maximum point is also the __.

A

Capacity

32
Q

After the maximum point, total number of the product produced begins to __.

A

Shrink

33
Q

The total product curve is __ shaped.

A

“S”

34
Q

The total product curve is convex when the output is __ at a(n) __ rate.

A

Increasing; Increasing

35
Q

The total product curve is concave when the output is __ at a(n) __ rate.

A

Increasing; Decreasing

36
Q

The change in total output that results from increasing the amount of variable input, labor, by 1 unit is

A

The concept of the marginal product of labor

37
Q

When too much of the variable input is congested in the fixed inputs,

A

Productivity falls

38
Q

After hitting the maximum point, the volume of output __ overall.

A

Decreases

39
Q

When the total product curve is convex, the slope is __.

A

Increasing

40
Q

When the total product curve is concave, the marginal product is __.

A

Diminishing

41
Q

Marginal product of labor is defined as

A

The additional output a firm can produce by hiring one more worker.

42
Q

A two story diagram shows

A

how two graphs are related.

43
Q

In a two story diagram, the two graphs have the same variable measured on the which axis?

A

Horizontal or “x” axis

44
Q

When the total product curve is convex, it causes marginal product to __.

A

Increase

45
Q

When the total product curve maxes out, the marginal product becomes __.

A

Negative

46
Q

As slope on the total product curve gets steeper, marginal product __.

A

Increases

47
Q

When you add extra workers all working together at the same time, what becomes possible?

A

Specialization and teamwork

48
Q

Marginal product of technology is

A

how production changes when you add additional workers that are working together at the same time.

49
Q

T or F: If the marginal product is negative, the slope of the total product curve is negative.

A

True

50
Q

T or F: When the marginal product is increasing, the total product curve is convex.

A

True

51
Q

T or F: The marginal product curve usually starts small, increases to a maximum, and starts to decrease.

A

True

52
Q

T or F: Marginal product is usually graphed with marginal product on the vertical axis and the variable output on the horizontal axis.

A

True

53
Q

T or F: Using Marginal Product (MP), a firm can determine the level of output it has to produce in order to maximize profits.

A

True

54
Q

Marginal Product (MP) tells us

A

The benefit of adding a worker

55
Q

Average Product (AP) tells us

A

Output per worker

56
Q

The total output divided by the total labor input equals the

A

Average product of labor

57
Q

T or F: The slope of a line from the origin to any point on a graphed curve changes with every point.

A

True

58
Q

When the marginal product of labor curve is above the average product, the average product curve is __.

A

Rising

59
Q

If you’re adding workers that are more productive than the average, you’re pulling __ the average.

A

Up

60
Q

The marginal product curve will intersect the average product curve when the average product curve is at its __ of average product.

A

Maximum

61
Q

When the marginal product of labor curve is below the average product, the average product is __.

A

Falling

62
Q

Average product and marginal product are equal

A

At the maximum average product

63
Q

If you’re adding workers that are less productive than average, you’re pulling __ the average.

A

Down

64
Q

When the curve is sloping __, the curve is convex, and when the curve is sloping __ the curve is concave.

A

Upward; Downward

Econ 2106 Extra Credit #2 (4 decks)

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